NDB debenture snapped up; issue left open until second tranche taken up

The National Development Bank PLC (NDB) yesterday announced the over-subscription of the initial tranche of its subordinated debenture to beef up Tier II capital base which is being rapidly taken up to support its aggressive lending in to the newly ventured areas. 

The bank announced that 50 million of its Tier II debentures issued at a price of Rs.100 each had been fully taken up and it also received applications in excess of the number of debentures put on offer.   

However, the bank said it will keep the issue open till today (March 27) until the second tranche of 15 million debentures is also taken up, which will add up to a total of Rs.6.5 billion in fresh Tier II capital. 

“ …the issue would be closed at 4.30 p.m. on 27th March 2019, where upon the initial issue of fifty million (50,000,000) of the said debentures being subscribed, and with the option to issue up to a further fifteen million (15,000,000) of said debentures to accommodate any applications that may be received after the announcement of the oversubscription of the initial issue. 

The basis of allotment will be notified to the CSE in due course”, NDB said in a stock exchange disclosure. 

NDB announced the issuance of the subordinated debenture to drive its aggressive lending growth, which began in 2017 after Dimantha Seneviratne took over as its Chief Executive Officer in |that year. 

Under Seneviratne, the bank, which used to be a project lender grew rapidly in the retail and SME space, and it recorded the highest growth in loans of 27 percent in 2018. 

The bank also reported the highest growth in earning of 51 percent to Rs.5.3 billion or Rs.28.67 share.    

Fitch Ratings in February revised the bank’s rating outlook to ‘negative’ from ‘stable’ citing pressure mounting on its capital buffers and its disproportionate tilt towards retail and SME side which is typically more susceptible to economic shocks, which could affect the bank’s asset quality.

NDB’s national long term rating stays at A+.

The bank announced the Rs.6.5 billion debenture in two tranches and with maturities of 5 years and the instruments include a non-viability clause where they could convert to ordinary shares if so determined by the Monetary Board of Sri Lanka.